Setback for Malaysia’s tourism tax with massive cancellations from China

Malaysia’s tourism growth curve may take a severe dive with the proposed tourism tax planned from July 1 but seems to have been put on hold with the cancellation of 3000 Chinese tourists who have opted for Thailand instead rather than face an additional expense burden of Malaysian Ringgit (RM) 100,000 (US$23,286).

The industry has reacted adversely to the proposed imposition of RM20 per night for 5-star hotel rooms, RM 10 for four-star accommodation and RM 5 for stay in one to three-star establishments,

Tourism Malaysia’s website had a bullish story to tell, with 2016 tourist receipts amounting to RM82.1billion, which is an 18.8 per cent growth from RM69.1billion in 2015. Also, tourist arrivals last year stood at 26.76 million, a 4 per cent increase from the previous year. A World Tourism & Travel Council report forecasts the total contribution of travel and tourism to the country’s GDP to rise by 4.2 per cent in 2017 with 75 per cent of tourists to Malaysia coming from Singapore, Indonesia, China, Brunei and Thailand. But Malaysia’s tourism sector is trailing behind that of neighbouring Thailand and Singapore. Putting up more barriers may deter tourists from choosing Malaysia as a preferred destination.

The Tourism Tax (TTx) – proposed to be implemented on July 1 this year but reportedly postponed to August 1 – is set to provide a sustainable fund for the development of Malaysia’s tourism industry. Tourism and Culture Minister Mohamed Nazri bin Abdul Aziz  reportedly said potential revenue from the new tax would be around RM654 million, if an occupancy rate of 60 per cent can be achieved for the 11 million room nights available in the country. A higher occupancy rate of 80 per cent will boost collections to RM872 million. TTx will see local and international tourists paying a levy to the hotels and apartments, on a per-room, per-night basis. This excludes homestays and hotels with less than 10 rooms. However, in the current year, occupancy has hovered between 35 and 40 per cent.

The Malaysian Association of Convention and Exhibition Organisers and Suppliers (Maceos) acting vice-president Gracie Geikie stated that the abrupt imposition of the tax without consultation with industry players will be damaging.

One Comment |

  • Zakariya Musa -

    As it’s rightly said, many industry players are not against TTx but how its was handled and shared with the stakeholders can be further improved. The negative impact on this rush implementation is quite big and damaging for many hotels and resorts. With the current business situation which is very challenging, the government should do more to help the hoteliers. There are many more people or sectors that have benefitted from the tourism industry but why penalise the hotels and resorts? Why can’t the government impose exit tax for international tourists? Why also tax the domestic tourists which the government is relying on during the soft market situation? Why charge per night and not just RM20.00 per international tourist? It,s good that the government is targeting high tax revenue but the damage has made Malaysia lose much more. It’s penny wise and pound foolish. There are many good and experienced bureaucrats who can actually put their heads together with inputs from the industry players to improve on this TTx. Malaysia boleh..!

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